Trade liberalisation in Sub-Saharan Africa : case study of South Africa

A striking feature of South Africa's trade liberalisation is that, until 1995, it did not involve any import liberalisation. The focus of earlier liberalisation was the reduction of anti-export bias, and, on the import side, the replacement of QRs with equivalent tariffs and other duties. This distinguishes the process in South Africa from that which has happened in other African liberalisations. A second distinction (and the two are in all likelihood connected) is that South Africa was not pressured into making changes as part of conditions attached to a loan; trade policy has evolved in response to the perceived needs and problems of the economy, and has had the commitment of government and the support of the business community, virtually eliminating the credibility problem. A third noteworthy difference is that South Africa was the first African country with a GATT offer, signifying its new commitment to a more outward-oriented growth strategy. The reintegration of South Africa into Southern Africa poses a dilemma. South African manufacturing firms are felt by other regional manufacturers to be a threat. All countries in the region are afraid of being swamped by South African trade and investment, or of losing foreign investment to South Africa. On other hand, south Africa is both a large market for regional produced goods (including manufactures) and a reliable (though not necessarily cheaper) source of imports which is closer than Europe and North America. Access to the South African market provides both competition, which should improve efficiency in production, and opportunities to gain from economies of scale. South African penetration of the region is likely to increase in the medium term [author]